Caveat Mortgagor Posted July 16, 2010 Share Posted July 16, 2010 Lots of housing bear stories around at the moment. I like this one. http://www.moneymarketing.co.uk/mortgages/coalition-ready-to-let-property-values-fall/1015197.article Coalition ready to let property values fall Industry experts believe the Government is more focused on helping businesses than it is on supporting the housing and mortgage markets. Speaking at a Money Marketing round table last week, Barclays director of intermediaries David Finlay said the Government sees the housing market as something that will start to recover naturally after the rest of the economy is on a better footing. He says: “I think the coalition Government has taken a slightly different view, in that they are very much looking at the business economy and the banking sector as a whole. I think they are potentially looking at housing as the lag element to their wider proposition. All they are really concentrating on is the economy.” Association of Mortgage Intermediaries director Robert Sinclair said the Government does not want to stimulate the housing market and it may even want to see property values fall from a “disproportionate” level. He said: “They do not want to be in that position again where people treat their properties like an ATM. We have got this big pressure coming from the Treasury where we saw this big rise in the capital value of property which they believe was disproportionate. “They do expect this fall in the capital values of residential properties from about £4trn. They think £3trn might be a better number, nobody is going to come out and say that though.” Building Societies Association head of mortgage policy Paul Broadhead said: “All of a sudden, it seems the support is unravelling, which will make consumers far more cautious about whether they should upsize now and whether they should even get on to the ladder.” Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted July 16, 2010 Share Posted July 16, 2010 (edited) Lots of housing bear stories around at the moment. I like this one. http://www.moneymarketing.co.uk/mortgages/coalition-ready-to-let-property-values-fall/1015197.article (...) This is the best news of the year! Edit: Best news for at least 5 years! "Association of Mortgage Intermediaries director Robert Sinclair said the Government does not want to stimulate the housing market and it may even want to see property values fall from a “disproportionate” level. (...) “They do expect this fall in the capital values of residential properties from about £4trn. They think £3trn might be a better number, nobody is going to come out and say that though.” Hence the ideal correction for the Treasury/Coalition is -25% from here. . Edited July 16, 2010 by Tired of Waiting Quote Link to comment Share on other sites More sharing options...
ccc Posted July 16, 2010 Share Posted July 16, 2010 Chances of this being aired on BBC News in any mainstream slot.. Quote Link to comment Share on other sites More sharing options...
Mega Posted July 16, 2010 Share Posted July 16, 2010 Drink deeply from the well of nothingless BTLer SCUM! Mike Quote Link to comment Share on other sites More sharing options...
VeryMeanReversion Posted July 16, 2010 Share Posted July 16, 2010 “They do expect this fall in the capital values of residential properties from about £4trn. They think £3trn might be a better number, nobody is going to come out and say that though.” I think £2trn is a better number but I can live with a government that has a "25% off nominal houses prices" policy. Negative net mortgage lending of £20bn per month, here we come. VMR. Quote Link to comment Share on other sites More sharing options...
Traktion Posted July 16, 2010 Share Posted July 16, 2010 How can they both save the banks and stop property prices from falling? The latter breaks the former. Sooner or later, they're going to have to realise that both need to be slain. The problem is, we then have a deflationary spiral to worry about. What a mess! Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted July 16, 2010 Share Posted July 16, 2010 I think £2trn is a better number but I can live with a government that has a "25% off nominal houses prices" policy. Negative net mortgage lending of £20bn per month, here we come. VMR. Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted July 16, 2010 Share Posted July 16, 2010 How can they both save the banks and stop property prices from falling? The latter breaks the former. Sooner or later, they're going to have to realise that both need to be slain. The problem is, we then have a deflationary spiral to worry about. What a mess! The Treasury + FSA have the numbers, bank's stress testing, etc. I remember reading somewhere that the UK banks could cope with a HP fall of some 15%. I don't remember if that was per year, or in total though. Sorry. Quote Link to comment Share on other sites More sharing options...
Beggar Thy Children Posted July 16, 2010 Share Posted July 16, 2010 Brought a tear to my eye reading that. I love how they think they can target a certain reduction in residential property value of 25%. Quote Link to comment Share on other sites More sharing options...
tomandlu Posted July 16, 2010 Share Posted July 16, 2010 How can they both save the banks and stop property prices from falling? The latter breaks the former. Sooner or later, they're going to have to realise that both need to be slain. The problem is, we then have a deflationary spiral to worry about. What a mess! Oh, surely the banks have equity of at least 25% of their assets, so no problem then... Quote Link to comment Share on other sites More sharing options...
Traktion Posted July 16, 2010 Share Posted July 16, 2010 The Treasury + FSA have the numbers, bank's stress testing, etc. I remember reading somewhere that the UK banks could cope with a HP fall of some 15%. I don't remember if that was per year, or in total though. Sorry. 15% isn't going to help - the prices are still way too expensive in most parts of the UK. Here in NI, we've had 40% odd falls and I still expect them to halve again before the approach 'good value'. I'm sure the government will just print up some more money for the bankers, when they realise they are sitting on a load of broken promises, though. That will stretch the agony out for a good old decade or two... Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted July 16, 2010 Share Posted July 16, 2010 Brought a tear to my eye reading that. I love how they think they can target a certain reduction in residential property value of 25%. The Gov/BoE can't be too precise, nor keep prices too high nor too low, but they can keep them in a reasonable band, say between 20% and 30% down from here. This is feasible. Quote Link to comment Share on other sites More sharing options...
plummet expert Posted July 16, 2010 Share Posted July 16, 2010 He says: “I think the coalition Government has taken a slightly different view, in that they are very much looking at the business economy and the banking sector as a whole. I think they are potentially looking at housing as the lag element to their wider proposition. All they are really concentrating on is the economy.” He said: “They do not want to be in that position again where people treat their properties like an ATM. We have got this big pressure coming from the Treasury where we saw this big rise in the capital value of property which they believe was disproportionate. “They do expect this fall in the capital values of residential properties from about £4trn. They think £3trn might be a better number, nobody is going to come out and say that though.” Building Societies Association head of mortgage policy Paul Broadhead said: “All of a sudden, it seems the support is unravelling, which will make consumers far more cautious about whether they should upsize now and whether they should even get on to the ladder.” Hooray! The 'economy' has been adjudged to be something other than a few bricks on a postage stamp of land! They have noticed Brown created a MEW and ATM credit boom/bust actually, and even more than that, they expect property to fall by 25%. Bingo! I am sure property will overshoot this projected fall. If the Coalition have any sense, they will quietly tell the FSA to put in proper mortgage controls to prevent the process repeating. They seem to be preparing to do so. We need to encourage a debate as to what reasonable controls should exist once prices have fallen properly. I am now of a mindset that about 3 years from now will be the time to buy. Keep on renting. Quote Link to comment Share on other sites More sharing options...
Liquid Goldfish Posted July 16, 2010 Share Posted July 16, 2010 The Gov/BoE can't be too precise, nor keep prices too high nor too low, but they can keep them in a reasonable band, say between 20% and 30% down from here. This is feasible. Maybe long term they can hit such a band But once HPC starts, surely they'll find it hard to stop a big undershoot on the way down? Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted July 16, 2010 Share Posted July 16, 2010 Maybe long term they can hit such a band But once HPC starts, surely they'll find it hard to stop a big undershoot on the way down? Maybe, nobody knows for sure. But Brown did manage to abort a bubble bursting, incredibly, mainly with interest rates very low, help for "struggling hard-working families" (paying the mortgages for them!!!), etc. You remember... Quote Link to comment Share on other sites More sharing options...
thecrashingisles Posted July 16, 2010 Share Posted July 16, 2010 How can they both save the banks and stop property prices from falling? The latter breaks the former. I think there is a tendancy to make too many assumptions based on the American experience where collapsing house prices combined with non-recourse loans really did break the banks. Quote Link to comment Share on other sites More sharing options...
Liquid Goldfish Posted July 16, 2010 Share Posted July 16, 2010 Building Societies Association head of mortgage policy Paul Broadhead said: “All of a sudden, it seems the support is unravelling, which will make consumers far more cautious about whether they should upsize now and whether they should even get on to the ladder.” What support has been cut and what's left to cut? So far I make it SMI IR reduced, HB reduced, ending that scheme for buying new builds also not striclty support, but HIPs abolished any others? Quote Link to comment Share on other sites More sharing options...
stuckmojo Posted July 16, 2010 Share Posted July 16, 2010 this could be a step change in the game. I really want to believe the new government "sees" it. But I remain cautious on this. Quote Link to comment Share on other sites More sharing options...
stuckmojo Posted July 16, 2010 Share Posted July 16, 2010 this could be a step change in the game. I really want to believe the new government "sees" it. But I remain cautious on this. Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted July 16, 2010 Share Posted July 16, 2010 I think there is a tendancy to make too many assumptions based on the American experience where collapsing house prices combined with non-recourse loans really did break the banks. They (Treasury/Coalition/BoE) will manage it. The main point is that now we finally know that they get it. That houses should not be ATMs, that what matters is the real economy, etc. The whole malarkey! They do get it all !!! Now we know! I wasn't sure of that - until now! It is brilliant news! The best for quite a few years. Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted July 16, 2010 Share Posted July 16, 2010 (edited) this could be a step change in the game. I really want to believe the new government "sees" it. But I remain cautious on this. I understand your caution. And I am a bit worried if I am getting too happy too soon. But the language there - particularly the part about houses should not be treated as ATMs - points clearly to the core of it all. I think they get it. And of course they can't go publicly with it, as the majority of the - people home "owners" (mortgaged) - would not understand it. . Edited July 16, 2010 by Tired of Waiting Quote Link to comment Share on other sites More sharing options...
Traktion Posted July 16, 2010 Share Posted July 16, 2010 I think there is a tendancy to make too many assumptions based on the American experience where collapsing house prices combined with non-recourse loans really did break the banks. AFAIK, even if people don't default, the banks will be technically insolvent. That's a pretty precarious position for a bank to be in. Quote Link to comment Share on other sites More sharing options...
LuckyOne Posted July 16, 2010 Share Posted July 16, 2010 I think there is a tendancy to make too many assumptions based on the American experience where collapsing house prices combined with non-recourse loans really did break the banks. Michigan, Nevada and Ohio are full recourse states and have done badly Florida and California are non recourse states and have done badly Texas is a non recourse state and has done relatively well as they do not allow MEWing Most HELOCs / MEW loans are full recourse in all states Most modified loans are full recourse in all states Taxes are due in all states on the negative equity amount (if any) upon default The Americans do not get as much of a free option to walk away from negative equity as some seem to think http://www.forecloseddreams.com/recourse_states Quote Link to comment Share on other sites More sharing options...
lulu Posted July 16, 2010 Share Posted July 16, 2010 Chances of this being aired on BBC News in any mainstream slot.. No but maybe the Daily Excrement will have it on their front page.... Quote Link to comment Share on other sites More sharing options...
concerned_money Posted July 16, 2010 Share Posted July 16, 2010 How can they both save the banks and stop property prices from falling? The latter breaks the former. Sooner or later, they're going to have to realise that both need to be slain. The problem is, we then have a deflationary spiral to worry about. What a mess! Housing IS the economy, so I guess they'll be focusing on housing then Quote Link to comment Share on other sites More sharing options...
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